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2019 (4) TMI 1108 - AT - Income TaxAddition u/s.145A - Enhancement of closing stock value - opening stock, purchases, sales and closing stock of the goods were recorded in the books of accounts without including the amount of CENVAT/VAT - assessee following the exclusive method of accounting - CIT(A) deleted the addition made by AO by observing that the assessee has been following its method of valuation consistently and there was no dissatisfaction of AO about the correctness/completeness of the books of accounts of the assessee - HELD THAT:- Assessee has been recording its transactions of purchase, sales, and valuation of inventories, net of CENVAT/VAT consistently. Thus, if the inventory of closing stock is enhanced by the amount of CENVAT credit attributable to it, then the amount of corresponding purchases should also be increased by the said amount which will result in tax neutral exercise. Thus, in our considered view, the Assessing Officer erred in enhancing the value of closing stock without giving effect to the purchases. There is no ambiguity that the assessee has been following the exclusive method of accounting. However, the assessee to comply the provisions of section 145A of the Act has given the effect of CENVAT/VAT in the opening stock, purchases, sales and closing stock in the memorandum profit and loss account as placed. Assessee has made its computation of income after taking the profit as shown in the memorandum profit and loss account as on 31/03/2008. Thus, we can safely conclude that though the assessee is following the exclusive method of accounting which is contrary to the provisions of section 145A but the effect of the same has been duly considered by the assessee in its memorandum profit and loss account which was offered to tax. Thus, there cannot be any fault of the assessee merely on the reasoning that the assessee has not valued its closing stock as per the provisions of section 145A of the Act. - Decided against revenue
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